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Small Business Employment Guide: Five Important Laws to Know

Small Business Employment Guide: Five Important Laws to Know

By: Melanie Berkowitz, Esq.

The myriad of state and Federal laws that govern the workplace are complex. Understanding employment law can be confusing, whether you are a small business-owner, a new business-owner, or an employer who hasn’t had a chance to review employment policies for a while.  

Do you know enough to keep your employment policies in compliance to maintain a legal hiring process? Take this short quiz to find out how well you understand several important legal issues that affect the workplace:

True or False:

  1. Only companies that employ unionized employees have to comply with the National Labor Relations Act.
  2. An employee is not considered “disabled” if they have a medical condition that can be controlled with medication (i.e., epilepsy.)
  3. If an employee asks for time off to “take care of some family issues” but does not request leave under the Family and Medical Leave Act, you are not required to provide FMLA leave.
  4. When terminating a group of employees because of a reduction in force, you do not have to consider any special legal responsibilities towards those employees who are age 40 or over as long as you also terminate employees who are younger than 40.
  5. If you intend to use an outside agency to perform background screening on employees or job applicants, it’s a good idea to add a request for consent to the bottom of your employment application forms.

Each of the statements includes at least one incorrect element. The correct answer to all five questions is “false.” Small companies that may not have regular access to a labor and employment lawyer are particularly vulnerable to making mistakes with employment decisions. 

Familiarity with laws that affect the workplace is important. Employers are encouraged to engage an attorney who is experienced in employment matters before making big decisions. Employment attorneys can also help draft and review employment policies to make sure your day-to-day interactions with your employees are lawful as well.

At the very least, small business owners (like all employers) need to recognize which Federal and state employment laws apply to them and maintain a basic understanding of each law’s requirements. The resources listed below will help you get started.

The National Labor Relations Act (NLRA)

Many employers are surprised to learn that they are subject to the requirements of the NLRA even if they do not have any unionized employees. This is because the law protects far more employees than just those who are members of a union.  

With only a few exceptions, the NLRA applies to all private employers who are engaged in interstate commerce. The NLRA guarantees the right of employees to organize (join a union) and bargain collectively with their employer, or to refrain from such activity. Employers and unions have rights under the act as well.

The law is enforced by the National Labor Relations Board (NLRB.) Employers with one or more employees are subject to the NLRA. Industries that are exempt from NLRA requirements: airlines, railroads, agriculture and government.  

The Americans with Disabilities Act (ADA)

The ADA prohibits discrimination against “qualified individuals with disabilities” in all employment practices, including job application procedures, hiring, firing, advancement, compensation, training, and other terms, conditions and privileges of employment. It applies to recruitment, advertising, tenure, layoff, leave, fringe benefits and all other employment-related activities. The definition of “disability” is very important because the law only protects individuals who have a disability, which means they: 

  • Have a physical or mental impairment that substantially limits one or more major life activities;
  • Have a record of such impairment; or
  • Are regarded as having such impairment.

Any individual with an impairment that does not limit a major life activity is not considered disabled for the purposes of the ADA. Employers have certain responsibilities towards disabled employees, so knowing how to determine if a worker is covered by the law is important.

The Act applies to all employers with 15 or more employees. Small employers can find information about the ADA specific to them on the EEOC’s website. 

A new amendment to the ADA went into effect January 1, 2009. The ADA Amendments Act of 2008 (ADAAA) makes a number of changes to the law’s definition of the word “disability.” Among them, the ADAAA clarifies that the determination about whether a person is disabled must be made without considering any mitigating measures, such as medications that eliminate symptoms. Therefore, an employee whose epilepsy is controlled by medication may still be considered disabled if he or she meets the other requirements of the law.

The ADAAA emphasizes that the definition of disability should be construed broadly so that it covers individuals to the maximum extent permitted by the terms of the ADA. Therefore, any employer who has a question about whether an employee is disabled or what their duties are under the law should consult with an employment attorney.

Family and Medical Leave Act (FMLA)

The FMLA is one of the most complex and misunderstood employment laws. Generally, it requires covered employers to grant an eligible employee up to a total of 12 work weeks of unpaid leave during any 12-month period for one or more of the following reasons:

  • The birth and care of the newborn child of the employee; 
  • Placement with the employee of a son or daughter for adoption or foster care; 
  • Care for an immediate family member (spouse, child, or parent) with a serious health condition; 
  • Taking of medical leave when the employee is unable to work because of a serious health condition.

The FMLA applies to private, state and local government, and some Federal employers who have at least 50 employees within 75 road miles of each other (for example, in two locations, 30 miles apart.) Determining when and if an employee is eligible for FMLA leave can be difficult. An employee does not need to specifically mention the FMLA by name to put an employer on notice that he or she may be eligible for leave under the law, and the employer has a number of burdens to obtain and verify medical information about an employee requesting medical leave.

To assist employers, the Department of Labor has issued an overview of the law and a number of compliance assistance materials. These materials include a poster that employers must post at their workplaces and fact sheets about the law.

In 2009, the FMLA was amended to include additional rules about granting leave for employees who need to care for family members who were injured in the course of military service.  

Age Discrimination in Employment Act (ADEA)

The ADEA protects individuals who are 40 years of age or older from employment discrimination based on age. The law applies to employers with 20 or more employees and covers private employers as well as state, local and Federal government.   

Only in rare circumstances, when age is a “bona fide occupational qualification” (BFOQ), may an employer take age into account when hiring or promoting an employee. Most BFOQs arise because of safety concerns.  For example, it is lawful to place a limit on the age of airline pilots.

When an employer terminates an employee or employees who are age 40 or older, it may have certain additional legal responsibilities toward them even if the employer terminates younger employees at the same time. These requirements occur if the employer wishes to offer the terminated employee(s) additional money or benefits in exchange for a  release (or “waiver”) of liability for all claims connected with the employment relationship, including discrimination claims under the ADEA.

The Fair Credit Reporting Act (FCRA)

The FCRA is a complex statute that promotes the accuracy, fairness and privacy of consumers’ credit information and credit history. For employment purposes, that includes making sure that an employer does not conduct a background check on any job applicant or employee without complying with a number of requirements

All individuals, including employees and job applicants have a number of rights under the FCRA. While it is true that an employer cannot use an outside company to conduct a background check on an employee or job applicant without first getting his or her consent, the consent form must be on a separate document from the job application.

Legal Disclaimer: None of the information provided herein constitutes legal advice on behalf of Monster.